Spanish bond auction sees lower borrowing costs

Euro coin held in front of Spanish flag Markets are focusing on whether Spain will ask for a full sovereign bail-out

Spain's borrowing costs eased at the country's latest bond auction where it raised 4.8bn euros (£3.84bn) after selling three and 10-year bonds.

There was strong demand for the 10-year bonds, with investors bidding for nearly three times the amount on offer.

The average yield was 5.66%, down from 6.65% at the previous auction, and below the 5.95% average for the year.

The government's borrowing costs have fallen since the European Central Bank announced its bond-buying plan.

"Overall the auctions today were taken comfortably," said Nick Stamenkovic of Ria Capital Markets, "but a sustainable decline in yields really depends on the Spanish government coming up to the plate and asking for a sovereign bailout."

Investors bid for 1.6 times the amount of three-year bonds on offer, with an average yield of 3.85%, slightly higher than the year average of 3.82%.

This auction follows an earlier round of fundraising on Tuesday, when the Spanish government raised 4.6bn euros in 12- and 18-month loans on the bond markets.

On 6 September, ECB president Mario Draghi unveiled details of a bond-buying plan aimed at easing the eurozone's debt crisis.

Under the plan, the ECB would agree to buy a potentially unlimited amount of bonds of debt-stricken eurozone members on the condition that these countries made a formal request for bailout funds and stuck to the terms of any deal.

The German Bundesbank remains opposed to the idea.

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.